Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/77783 
Year of Publication: 
2010
Citation: 
[Journal:] SERIEs - Journal of the Spanish Economic Association [ISSN:] 1869-4195 [Volume:] 1 [Issue:] 1/2 [Publisher:] Springer [Place:] Heidelberg [Year:] 2010 [Pages:] 101-130
Publisher: 
Springer, Heidelberg
Abstract: 
In the last 15 years, Spain has witnessed a large increase in housing prices and in the importance of the housing sector, which has refreshed the debate on the drivers of housing cycles. Since Spain joined the European Monetary Union (EMU), twomain important factors behind the housing boom appear to be the decrease of nominal interest rates due to the disappearance of currency risk premia, and demographic factors related to immigration and changing patterns in household composition. In order to assess the importance of these and other factors, in this paper we estimate a New Keynesian model of a currency area with durable goods, using data for Spain and the rest of the EMU. We find that parameter estimates are similar to the ones estimated in the literature, in that, in particular, durable goods prices are more flexible than nondurable consumption goods. We find that housing demand and technology shocks are the main driver of the recent housing boom. Finally, we examine the role of different rigidities suggested in the literature to help the model fit the data.We find that labor market frictions, that in the model imply costly labor reallocation across sectors, are crucial to explain main features of the data. On the other hand, financial frictions that impose a collateral constraint on borrowing do not appear to be relevant.
Subjects: 
housing
monetary policy
financial constraints
JEL: 
E44
E52
F41
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

Files in This Item:
File
Size
731.79 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.